Fast, actionable advice from Founders, CEOs, and Investors

Paul Graham (Co-Founder & Partner at Y Combinator) The Fatal PinchThere may be nothing founders are so prone to delude themselves about as how interested investors will be in giving them additional funding. It’s hard to convince investors the first time too, but founders expect that. What bites them the second time is a confluence of three forces: The company is spending more now than it did the first time it raised money. Investors have much higher standards for companies that have already raised money. The co… (read more)

Paul Graham (Co-Founder & Partner at Y Combinator) The Fatal PinchFounders overestimate their chances of raising more money, and so are slack about reaching profitability, which further decreases their chances of raising money.

Raju Rishi (General Partner @ RRE Ventures) When Revenue Isn’t The AnswerToo frequently, entrepreneurs and investors alike believe that the goal of a Seed Round is to get a startup to the Series A. It’s not. Seed Rounds are the only time in the lifecycle of a startup where you are allowed, expected, even encouraged to test your product in search of real product/ market fit.

Paul Graham (Co-Founder & Partner at Y Combinator) The Fatal PinchYou either have to fire good people, get some or all of the employees to take less salary for a while, or increase revenues. Getting people to take less salary is a weak solution that will only work when the problem isn’t too bad. Which leaves two options, firing good people and making more money. While trying to balance them, keep in mind the eventual goal: to be a successful product company in the sense of having a single thing lots of people u… (read more)

Paul Graham (Co-Founder & Partner at Y Combinator) The Fatal PinchIt may seem facile to suggest a startup make more money, as if that could be done for the asking. Usually a startup is already trying as hard as it can to sell whatever it sells. What I’m suggesting here is not so much to try harder to make money but to try to make money in a different way. For example, if you have only one person selling while the rest are writing code, consider having everyone work on selling. What good will more code do you wh… (read more)

Paul Graham (Co-Founder & Partner at Y Combinator) The Fatal PinchThere may be nothing founders are so prone to delude themselves about as how interested investors will be in giving them additional funding. It’s hard to convince investors the first time too, but founders expect that. What bites them the second time is a confluence of three forces: The company is spending more now than it did the first time it raised money. Investors have much higher standards for companies that have already raised money. The co… (read more)

Paul Graham (Co-Founder & Partner at Y Combinator) The Fatal PinchFounders overestimate their chances of raising more money, and so are slack about reaching profitability, which further decreases their chances of raising money.

Paul Graham (Co-Founder & Partner at Y Combinator) The Fatal PinchY Combinator tells founders who raise money to act as if it’s the last they’ll ever get. Because the self-reinforcing nature of this situation works the other way too: the less you need further investment, the easier it is to get.

Ed Sim (Founder and Managing Partner @ Boldstart Ventures) The 4 Kinds of Series A Rounds in Enterprise — MediumThe 4 kinds of A rounds:
No A round. Sucks. — self explanatory. Vision A round, super hard — raise on the promise and pre-launch, on the vision, huge market with the killer team that can build and scale. sometimes easier to raise on the promise and the expectations of amazing success than after the launch. Metrics A round, easier — killer metrics, repeatable growth and predictable sales model, used to be $80–$100k MRR/$1mm ARR, the bar is raisin… (read more)

Nnamdi Okike (Partner @ 645 Ventures) Charting A Path From Seed To A Competitive Series A Round | TechCruncha top-quartile enterprise-focused VC firm may have a $1 million ARR hurdle for a SaaS deal, or that a top-quartile consumer investor may have a $2 million run-rate revenue hurdle for an e-commerce company. Also for revenue-generating businesses, future growth plans are created that articulate a clear path to becoming a large revenue company with attractive future profit margins.

Shriram Bhashyam (Founder @ EquityZen) The Metrics Required for Raising a Series A RoundE-commerce. This is a dense market, with diminishing margins, and heavy-weight incumbents (see Amazon). Also, VCs are licking their wounds from companies like Fab and Gilt (wasn’t Gilt supposed to IPO for the last 4 years?). $1 million monthly recurring revenue (MRR) is the key metric here.

Shriram Bhashyam (Founder @ EquityZen) The Metrics Required for Raising a Series A RoundMarketplace. Marketplaces are tricky (trust us, we know) because of the chicken/egg problem with supply and demand (buyers want to see good supply, and good sellers will list where there are buyers). It is understood that liquid marketplaces also take a while to build. $500K-$1 million in monthly gross market volume (GMV). 20-30% MoM growth in GMV. Liquidity: > 10% demand/supply ratio. Transaction velocity: the time it takes to have a transaction… (read more)

Ari Newman (Network Catalyst @ Techstars) How to Get From Seed to Series A – Techstars“Build relationships, not pitches,” was discussed as well. The panel debated whether this was true for seed rounds vs. Series A. The gist of the debate was that many Series A round investment decisions can happen when the investor is in “advice mode” and the light bulb goes off.

Anjula Bath (Partner @ Trinity Ventures) Fundraising – From Seed To Series A by Techstars | Free Listening on SoundCloudDon’t ever tell anybody you’re raising money. Because the moment you tell them you’re raising money they think you’re selling them and that always works against you. I didn’t tell anybody I was raising money. I went around saying that I had this amazing idea that was getting all this tgraction and I didn’t know what to do and in 24 hours I got two term-sheets from investors.

Josh Kopelman (Partner at First Round) What the Seed Funding Boom Means for Raising a Series A | First Round ReviewWhen thinking about timing, remember, a good fundraising process will take between 4 and 8 weeks. Adding in preparation and time to close, you’re talking a few months. Remember this math when you’re thinking about timeline and proof points. Cutting things too close can be dangerous

Lee Hower (General Partner of NextView Ventures) What Milestones Are Needed to Raise a Series A? – AGILEVCThere’s no magic formula for a successful Series A unfortunately. But these five tenets can help internet / software entrepreneurs increase their prospects. (1) Core team ready to scale (2) Demonstrable market size (3) Repeatable, cost effective customer acquisition (4) Metric momentum (5) Plausible monetization

Fred Wilson (Co-Founder and Partner at Union Square Ventures) Some Thoughts On Seed Investing – AVCWe like seed investments in teams and opportunities where they have built and launched a product already. We don’t like investing in a concept or participating in a round where the uses of the capital will be to build and launch a product. This means the vast majority of seed rounds are not a fit for us. We pass on a lot of seed stage opportunities because it is “too early” for us.

Nnamdi Okike (Partner @ 645 Ventures) Charting A Path From Seed To A Competitive Series A Round | TechCrunchTop teams gather evidence to prove that the market is large enough to sustain a multi-hundred-million-dollar exit or potentially a billion-dollar revenue company. These companies typically demonstrate this evidence through a bottoms-up market analysis, starting with evidence achieved by the company and concluding with reasonable scaling assumptions supported by accurate research and trends.

Nnamdi Okike (Partner @ 645 Ventures) Charting A Path From Seed To A Competitive Series A Round | TechCrunchThe highest-potential seed companies marshal evidence to show that they can be at least No. 1 or No. 2 in the competitive market. This requires having a detailed awareness of competitors, and understanding their strengths and weaknesses. Intel’s Andy Grove famously stated that “Only the paranoid survive.” We find that a healthy level of competitive paranoia also characterizes the seed companies that reach highly competitive Series A rounds.

Moisey Uretsky (Co-Founder / Chief Product Officer @
DigitalOcean) Moisey Uretsky’s answer to How long is the due diligence process with Andreessen Horowitz? – QuoraEnsuring that our accounting and projections were on point, having their analysts review the market segment to review the competitors, and then of course dotting all of the legal i’s and t’s around articles of incorporation, employment agreements, and any other legal documents that while standard, are also incredibly important to have in other.

Raju Rishi (General Partner @ RRE Ventures) When Revenue Isn’t The AnswerToo frequently, entrepreneurs and investors alike believe that the goal of a Seed Round is to get a startup to the Series A. It’s not. Seed Rounds are the only time in the lifecycle of a startup where you are allowed, expected, even encouraged to test your product in search of real product/ market fit.